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In this Nov. 18, 2019 photo, patrons visit the sports betting area of Twin River Casino in Lincoln, R.I. Currently, companies licensed by Canadian provinces are only permitted to offer what is known as parlay-style sports bets: wagers that include more than one match.Steven Senne/The Associated Press

It is the second-biggest betting event in the U.S. sports calendar and when it kicks off in a couple of weeks Canadians will likely wager tens of millions of dollars on this year’s March Madness.

Spoiler alert: It may not be entirely legal.

For decades, travelling to Las Vegas was one of the few fully legal ways to place a bet in North America. But after a landmark U.S. Supreme Court ruling in 2018 struck down a ban on sports betting in other jurisdictions, a handful of states legalized it for last year’s NCAA men’s tournament, and dozens more have since followed suit. In Michigan and other states on or near the Canadian border, casino operators are hoping the 2020 NCAA men’s Final Four will pull in new customers who have been waiting decades to make legal bets in their own state.

Hundreds of thousands of Canadians – perhaps millions – won’t even bother travelling across the border. They’ll simply pull up apps on their smartphones, or visit websites operated by offshore companies and put down wagers on the tournament. Many don’t realize – or choose to ignore – that those bets operate in a grey zone: Neither strictly legal, nor likely to be prosecuted by the federal government. As long as their bets are accepted and payment made on winning wagers, they would rather not know.

Canadian casino operators are gritting their teeth and desperately hoping things will change soon so they can join the action. This week, a private member’s bill introduced in the House of Commons marked the third attempt in a decade by supporters of liberalized gambling to change the law.

“It’s frustrating,” Brian Masse, the NDP Member of Parliament for Windsor West, said in an interview. “Losing customers to Michigan is very difficult. It’s a missed opportunity.”

For more than a decade, Mr. Masse has been beating the drum for a tiny, but significant, change in the Criminal Code of Canada that would revolutionize this country’s gambling industry. Currently, companies licensed by Canadian provinces are only permitted to offer what is known as parlay-style sports bets: wagers that include more than one match. (Pro-Line, operated by the Ontario Lottery and Gaming Corporation (OLG), asks bettors to predict the outcome of between three and six sporting events.)

Until recently, sports leagues were concerned that other types of bets – say, on the outcome of a single game, which could potentially be fixed or thrown – might lead to corruption.

The Criminal Code permits only multievent betting. In 2013, a private member’s bill sponsored by Mr. Masse, which would have allowed the provinces to choose whether to offer single-event sports betting, passed the House of Commons. It then spent years in the Senate without being brought to a vote, bogged down by a handful of Senators opposed to the change.

Another attempt by Mr. Masse in the last Parliament failed to get out of the House of Commons.

But, one by one over the past few years, all of the major sports leagues in North America have reversed their stances on betting. Encouraged by studies suggesting sports wagering will prompt a spike in what they call “fan engagement,” the leagues are going all-in, especially for specific in-game bets and also for what are known as proposition, or “prop” bets that would make old-fashioned bookies salivate (or give them a heart attack). In-the-moment prop wagers could be placed dozens of times during a match: How many yards will the next passing play gain? Who will score the most three-pointers in a basketball game? How many shots will Auston Matthews take in his first power play? How many Atlanta Braves batters will the first Arizona Diamondbacks pitcher bean in the teams’ season opener? (Currently prop betting is available on Ontario’s Pro-Line, but similarly to wager on matches, they must be parlay-style bets with a minimum of three events.)

As the new season of Major League Soccer kicks off this weekend, each stadium will be equipped with a battery of cameras to capture reams of data for prop bets. Earlier this month, the NFL announced it was hiring a vice-president of sports betting. When the NHL playoffs begin in April, the league is expected to provide data to its broadcast partners on puck and player tracking, in case fans would like to bet on whose slap shot is the hardest, or which player has the longest puck possession.

On Tuesday in Ottawa, Mr. Masse seconded a private member’s bill, introduced by Kevin Waugh, the Conservative MP for Saskatoon-Grasswood, which he hopes, in a minority Parliament, will pass the House and then the Senate. (Mr. Waugh drew an earlier number in the private member’s bill lottery of the new Parliament, so Mr. Masse allowed him to take over his effort.)

There are other ways for the law to be passed, including an order-in-council or the insertion of a few sentences in the next federal budget, both of which seem unlikely. Federal Justice Minister David Lametti has indicated that liberalizing the betting laws are not a priority.

Mr. Masse is cautiously hopeful, but he can’t help but be rueful. “We’ve missed the boat,” he said, noting that some Ontario casinos have held off spending millions of dollars to upgrade their facilities until they know when or whether they’ll be able to offer sports wagering alongside their other games. “I’m just really concerned.”

Canada was supposed to be leading the sports-wagering revolution. When Mr. Masse was shepherding his first bill through the House, in 2012 and 2013, advocates saw liberalized sports betting as an opportunity to give operators in Canada, where the provinces already had decades of experience overseeing parlays, a competitive advantage over their U.S. counterparts.

“We’ve had legal sports wagering for decades, right?” Paul Burns, the president and CEO of the Canadian Gaming Association trade group, said. “In most of the United States, [even] parlay wasn’t legal.”

Besides, he adds, many Canadians are already betting on sports through online offshore operators, such as the British companies BET365 and Pinnacle, or the Antigua and Barbados-based Bodog. His group estimates Canadians wager about $4-billion through such operators, in what is known as the grey market. That is in addition to perhaps another $10-billion through illegal black-market operators such as organized-crime groups.

Strictly speaking, it is illegal in Canada to place a bet with a company that isn’t licensed by the province where the bet is taking place. But, as with the terms and conditions of other offshore operators, the fine print in the BET365 app explains to prospective bettors: “All bets … are considered to be placed and received in Gibraltar” (where the company has operations).

The federal government has never undertaken any prosecution that might test its ability to enforce the law.

Many grey-market companies would like to go entirely legit. “Our clients would love to be part of a regulated industry here in Canada,” said Chantal Cipriano, a lawyer with the Bay Street firm Dickinson-Wright, who says her clients include many offshore operators, though confidentiality precludes her from identifying them. “Unfortunately, we don’t have the option for them to even obtain a licence. They have to operate in the way that they are currently.”

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